by Tony Novak
Students often wonder if they really need health insurance. It seems
like a reasonable question when you are young and healthy and seemingly
invincible. After all, almost everyone who knows how to access the
health care system is provided with basic health care services and
acute care (like emergency care) in the United States, regardless
of whether or not they have health insurance. Young adults tend
to use health care services less often than any other group. The
odds are that a young adult will go more than 12 months without
any need for health care. Even among those who need health care,
the likelihood of exceeding $1000 annual healthcare expenses is
very small. So it is reasonable to wonder whether a young adult
really needs health insurance at all.
But the situation changes when we consider the more extensive and
more costly types of health care. The ability of a patient to obtain
top quality medical care for the most serious types of health care
- things like transplants, extended hospital care, physical rehabilitation,
and long term outpatient care - depend more on whether the patient
has adequate health insurance than any other factor. A simple attack
of appendicitis could easily wind up costing more than $25,000.
Even an affluent family will have difficulty arranging adequate
medical care without insurance coverage. Unfortunately, if you wait
until you need this type of care it will be difficult or impossible
to buy health insurance that covers these items. Often the most
immediate insurance concern for young people is the fact that most
colleges, trade schools, internship programs, sports teams, community-sponsored
travel opportunities and many other activities require health insurance
as an admission requirement.
Without health insurance, you do not pass "go". So there
is usually no question about it - most young people with ambitions
to advance their education need to have some type of health insurance.
Coverage Options There are many types of health insurance plans
available to young adults. The most popular plans are listed below.
Parent's Policy - Most students continue to be covered under a parent's
policy. If this option is available, it is almost always the best
option. But most health plans require that proof of full-time enrollment
be provided. Be aware of the maximum age for this benefit. In many
cases this coverage will expire when the student reaches age 23
(or at another age as stated in the insurance policy).
Employer Group Coverage - Most employers provide health insurance
to their full time employees and pay for most of the cost of this
employee benefit. This is called group health coverage. This benefit
is completely under the control of the employer. Many people do
not realize that there is no requirement for an employer to provide
this benefit. Most group health plans require that new employees
wait a few months before becoming eligible for coverage.
School-Sponsored Coverage These are usually uninsured
managed care arrangements to provide care to students in the local
area of the college or university.
Student Medical Policies These are privately insured
major medical policies designed specifically for students. These
are portable and offer coverage to the student in any location in
the U.S. These plans also cover graduate students, and are available
regardless of age or health. In most parts of the U.S., students
can buy a high quality health insurance plan for less than $70 per
month at www.medsave.com.
Short Term Medical Policies - Interim or gap insurance policies
are available to cover from one to 12 months. This coverage is inexpensive
and easy to obtain online in most states. The quality of the coverage
is excellent except that it does not cover pre-existing conditions.
These provide coverage in the U.S. only.
Individual Medical Policies - Permanent policies that you
buy directly from an insurance company offer excellent coverage,
strongest financial guarantees, and the most stability. These often
provide worldwide coverage. But all this comes at a higher price
and coverage is issued for a minimum of 12 months.
Travel Coverage / International Policies - Students planning
overseas travel should purchase a separate medical insurance plan
for the time that they are traveling, since most student health
plans do not cover charges incurred outside of the U.S. These policies
are specifically designed to pay for medical expenses and deal with
the other international complications (language, currency and business
issues) typically incurred while obtaining medical treatment overseas.
Terms to Know
Deductible or Co-payment
- this is the portion of the bill that you pay before the insurance
comes into play. These help reduce the cost of the insurance.
stands for "health maintenance organization". The HMO
may pay to keep you healthy, rather than only cover problems hen
things go wrong. HMOs tend to be popular among young healthy people,
but criticized by people receiving more serious medical care. Private
physicians tend to feel that they lose control over the quality
of a pateint's care when an HMO is involved.
- means that the policy reimburses you for any ordinary and necessary
medical expenses. This is the least restrictive type of coverage
but also the most expensive. Managed Care - this means that the
insurer has some authority to influence the type of health care
you are provided. This cuts healthcare costs but may also limit
your treatment. Pre-existing condition - a medical situation that
started before your insurance policy that may not be covered by
the health insurance policy.
the cost of the policy, usually ranging from $25 to over $200 monthly.
Tax-deductible - reduces your taxable income and thereby reduces
your total tax due at the end of the year. Most health insurance
is not tax deductible by individuals.
- the benefit provided by health insurance is usually tax-free.
This means the value of the coverage received as well as any cash
benefit paid as the result of a claim.
this means that not everyone will be accepted because acceptance
is based on individual medical history. The insurance company reviews
each application and selects the healthiest applicants for enrollment.
Premium rates are lower for those accepted, but these plans offer
no solution for people with pre-existing health conditions.
About the author:
Tony Novak, MBA, MT is a writer and financial adviser in Narberth,
PA focusing on tax and employee benefit issues. His businesses www.MedSave.com
and Freedom Benefits Association provide online benefits enrollment
for thousands of individuals and businesses nationwide.
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